Petronet-LNG and NTPC agree over Kayamkulam

Vol 7, PW 7 (18 Jun 03) Midstream & Downstream

WE CAN now report with certainty that Petronet-LNG will be among the bidders for NTPC's proposed 3m t/y gas tender to fuel increased electricity generation at its Kayamkulam power station in Kerala.

Petronet-LNG's participation was doubtful until the third week of May due to confusion over the pre-qualification terms set by NTPC. Understandably, PLNG was furious at what it perceived to be a deliberate attempt by NTPC to keep it out of the tender.

PETROWATCH learns however that NTPC and Petronet-LNG resolved this simmering row during a meeting in late May of directors from both companies. Before then Petronet LNG had written an angry letter to NTPC demanding to know if it was deliberately being kept out of the Kayamkulam process.

One of the PLNG participants at the meeting tells us: "We told them that according to their existing terms we will clearly stand disqualified for Kayamkulam." Of particular concern to PLNG is NTPC's condition that to be eligible a company must have developed, financed and implemented a regassification terminal or project worth $500m. During the meeting PLNG explained to NTPC that its Dahej terminal is under construction and not yet implemented.

"We discussed this with NTPC and they agreed to keep this condition open-ended." When PLNG submits its RFQ documents for the Kayamkulam tender it will clearly state that the Dahej LNG regassification terminal is under implementation and will be fully operational by 31st December 2003. Unfortunately, PLNG was unable to persuade NTPC to waive its condition that the eligible company should have an annual turnover of $500m.

"We do not have this kind of turnover now." To circumvent this condition PLNG hopes to leverage the balance sheet of one of its promoters much as it is doing for the Kawas-Gandhar tender where PLNG has formed a consortium with RasGas, BPCL, IOC and GAIL.